Labour could be set to introduce a “regressive” pay-per-mile road tax in the Autumn Budget after a top advisor to the previous government revealed that the Treasury has been pushing for such a scheme to be implemented for some time.
Adam Smith was the chief of staff under Conservative ex-Chancellor Jeremy Hunt and told the Telegraph newspaper that staff from HM Treasury frequently requested that the government “start[ed] preparatory work on a road pricing scheme”.
Pay-per-mile road taxation, also known as road pricing, would see drivers having to pay more Vehicle Excise Duty depending on how many miles they drive per year, in conjunction with how polluting (or not) their vehicle is. Simply put, this means that those who drive less, pay less, and those that drive more and thus use the roads more, pay more.
Smith said that with the change of government and the presence of a financial black hole in the government’s coffers that a pay-per-mile tax “will no doubt be back on officials’ agendas”. The growing adoption of EVs could make such a scheme even more likely, with the government and Treasury scrambling to generate a new flow of cash as revenue from fuel duty and company car Benefit-in-Kind tax dwindles.
The AA’s Chairman, Edmund King, previously backed a road pricing scheme, stating post-COVID-19 lockdown in 2020 that “The time is right because people are out there and they themselves [have] seen the benefits of walking and cycling and running.”
However, in light of the current cost of living crisis, the motoring association’s view on the matter has since shifted, with King telling Auto Express that such a levy would be “difficult to introduce” at this present time.
“If in the future a system is introduced, it must have incentives for those dependent on their cars in rural areas, disabled drivers, and shift workers,” he told us. “The scheme should be overseen by an independent body and should not aim to raise more revenue than is currently raised from drivers.”
Public opinion, on the other hand, will likely be a lot more negative. Auto Express also spoke to the Alliance of British Drivers, with ex-Chairman and spokesperson, Ian Taylor, admitting that “[We] do recognise that there is going to be a funding gap as vehicles go electric, but we still do not like the principle of road pricing.”
“It’s regressive taxation, plus the means of implementation doesn’t come cheap and will involve tracking people’s movements all the time which comes with its own privacy concerns.”
Such speculation surrounding road pricing comes shortly after Auto Express revealed that the government is set to rake in as much as three-quarters of a billion pounds via the controversial VED supplement – also known as the ‘luxury car tax’ – in this year alone.
Auto Express asked HM Treasury whether it plans to introduce a pay-per-mile road tax scheme, but it declined to comment, simply saying that “We are committed to supporting our automotive sector as we transition to electric vehicles in order to meet our legally binding climate targets.”
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